There's still growth in Genting Malaysia

At a time when we thought, Resorts World Malaysia is to have tough competition from Resorts World Singapore and Sands Singapore, as well as other more popular gaming destinations as in Macau, Genting Malaysia actually sprung a surprise in terms of what they can achieve. When Genting Malaysia was acquiring the group's gaming businesses in UK from Genting Singapore, the group got some flak as in it was presumed that the UK business is not a profitable business to be acquired. This time around based on its performance for the first half a year, there are some surprises considering the economic condition Europe is suffering from. As you can see, RW Malaysia still has growth both in revenue and EBITDA.

Quarter vs Quarter comparison is great even for revenue and EBITDA

The growth in UK shows that the group could possibly be very serious in building their businesses beyond Malaysia and Singapore. As I said in my previous article, we do not know how well these businesses in UK and US will turn out despite the seemingly bad press they are getting. One thing I know from my observation of its competitors, Genting is the strongest among the big players - and that includes Sands ("LVS").

We do not know that the group is taking this opportunity to expand fast and usually when a company is trying to do things fast there could be mistakes - as long as they are learning and manage those mistakes, that's allright. Remember, Malaysia and Singapore operations are huge cash cows.

IHH: Accounting Income vs Real Income

IHH has much potential. However, it has tried too hard to show numbers. The fact of the matter is that for a private hospital with strong brands, its results will come.

Reading yesterday's announcement, I can already envision what the headlines would be. The Star reported with headline, "Sterling performance for IHH Healthcare post-listing".
 
IHH reports - Total growth is driven by combination of factors:

• Consolidation of Acibadem Holdings from 24 Jan 2012
• One-time profit from sale (add RM193.6 million) of Mount Elizabeth Novena medical suites as well as fair valuation gain (add RM132.6 million) on Mount Elizabeth Novena’s investment properties held for rental
• Improved performance of existing operations
• Greater demand for quality healthcare services in Asia

Now, remember that this is one business which foresees full year PAT of between RM700 million to RM800 million during listing. Based on the report below, it seems it is on track, but of course with one-off items.

To be fair, they did have pre-operating expenses for Mount Elizabeth Novena which was charged to the accounts. Inclusive of those one-off items, its results look like this.

Now, all in all without the exceptional items, here are the actual results which we will see moderate to good growth over time - not exceptional.

You will note that with those income minus the one-off items, its performance should more resemble PAT of between RM500 - RM550 million. And it is trading at RM25.5 billion market capitalization. Shouldn't that be still expensive?

Bonia: Take note that the original owner has acquired >17%

To those who read my blog on this, the PNB block is actually in the hands of the founder of the company, CSS. See below, where he and his sibling have formed a company under the name of FTSB to acquire a 17.38% block from unknown parties.

What could potentially happened was as PNB and ASB were selling, these block were actually bought by several parties related to CSS - in multiple nominees so that the 5% substantial shareholding was not triggered. Otherwise, they would not have sold at a price below market i.e. RM2.04. Hence, if my speculation is right, they could have planned this all along. Bonia has not traded much below RM2.00 for this year, once PNB / ASB started to sell sometime around February.

While, I have highlighted this, as I have said often, do not mess with the owner as they have all the tools while retail shareholders do not.

Catcha Media: In the eyes of an analyst vs mine

Catcha Media reported its earnings yesterday. I originally thought of writing something today, however before that, I read an analysis from a local investment banking firm. It says as below:

 

To summarize, basically it says Catcha is not doing well and below their expectation. It in fact made losses over half year 2012. However, the investment banking firm expects the company to turnaround with better results due to the following:

• its foray into online regional auto (via iCar) portal looks good in the future;
• its acquisition of an online e-commerce business Haute Avenue looks good as it promised a profit guarantee of SGD1.5m per annum.

The Investment Bank values the company at a price of RM0.77. Catcha is trading at RM0.52 currently. Hence, it calls for a Buy.

My analysis

I am looking at the perspective of business. How it will trade I do not know as the company seems to be short on float. Hence it is easier to manoeuvre the share price by traders.

Catcha Media is a company which has not shown any strong potential. Its drop in revenue as well as registering losses despite its expectation of doing much better after its listing really disappoints. Over the last year, after its listing it has gone on acquisition (Haute Avenue) and exercise (iCar listing in Australia) to boost up its revenue and future. Those are exercises, but not something of substance as yet.

If it is claiming its foray of having a regional car web portal will succeed - that I have yet to be assured of. It is not that there are no automotive portal. Jobstreet acquired Autoworld.com.my years ago. For a company which has much cashflow than Catcha and already has proven ability in terms of building a dotcom business is not able to turn the business into something worthwhile. The most followed blog / portal for cars in Malaysia is www.paultan.org. I do not see Paul Tan making much despite he is very much widely followed. (I respect his ability to pull crowd though - it's not easy)

Success in Malaysia does not mean success in any other parts of South East Asia. Jobstreet is largest in Malaysia and Philippines. JobsDB is most successful in Singapore, Thailand and Hong Kong. Seek.com is largest in Australia.

I do not see an online portal on high end fashion been able to prove successful in any parts of the world. How is Haute Avenue being foreseen to be so?

For now based on the below financials as at half year 2012, it is showing more pain than gain. Its cashflow does not seem good as well with less than RM3 million cash remaining. Its listing in Australia for iCar may have raised it some cash for the South East Asian portal but making it successful is different from convincing investors to put in cash.

My question is, how is the analysis by the investment bank going to be prove us otherwise?

The only one substantial is iProperty.com which to some extent increased its presence nicely. However, if you look at the expenses, it has much revenue from other sources which is event management. Hence iProperty made much from event management as well as online services (although its Annual Report does not tell us anything). And in fact, iProperty still loses money despite it trying to expand at a vigorous speed.

Just in case you are interested, below is the Proforma Income Statement for iCar which is expected to be listed in Australia.

RRI land bought at around RM22.50 per sq ft

In an announcement today, Kwasa Land, a subsidiary under EPF has bought 2,330 acres of land at RM2.28 billion from the government. That comes to around RM22.46 per sq ft (which is seemingly very cheap). The development is planned for 15 years.

With such a large development being offered, will property prices taper down? - as supply will definitely increase.

Can I say something needs to be done to reduce the prices of properties? And this can be a good start.


p.s. Although I need a new house, believe me I am not in those category that seriously in need of one.